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In a major relief to road developers, the National Highways Authority of India (NHAI) has approved deferment of premium worth Rs 6,000 crore for nine projects, including those of Larsen & Toubro and Reliance Infrastructure.
The board of NHAI met on Friday and gave a final approval to the nine applications, said a senior official. The deferment would be available from 2014-15 till 2026-27, with the deferment granted during 2014-15 amounting to Rs 651.3 crore.
NHAI had received about 15 applications for rescheduling of premium. Five projects were not taken up by the board as they do not qualify for the scheme immediately under the rescheduling policy of the government. “Developers of these projects would be informed that they do not require any rescheduling of premium immediately. They might require it during 2016-17,” the official said.
The projects in which deferment of premium was allowed are four-laning and six-laning ones. In the former are the Godhra-Gujarat/MP border of BSCPL), Beawar-Pali-Pindwara (L&T), Rohtak-Panipat (Sadbhav) and Hyderabad-Yadgiri (Sadbhav). The six-laning ones are Samakhiyali-Gandhidham (L&T), Hosur-Krishnagiri (Reliance Infra), Tumkur-Chitradurga, (IRB), Ahmedabad– Vadodara (IRB) and Indore-Dewas (Gayatri-DLF).
There are 39 projects eligible for the relaxation under the rescheduling policy. The combined premium these developers owe the government is Rs 25,000 crore spread over the next 20 years. Five projects, including those of Sadbhav Engineering, Reliance Infrastructure and Oriental Structural Engineers, have not been qualified for rescheduling.
A panel headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, had suggested a policy to allow cash-starved road developers to reschedule their premium and the government had approved it before the poll code of conduct came into force.
Under the policy notified on March 4, road developers availing the rescheduling package are not to be allowed to pay dividend to their parent company until they clear all dues to NHAI. The government will allow the developer to pay 25 per cent of what they actually owe NHAI during the first three years; thereafter, the amount will be raised to 50 per cent. The developer will have to pay the remaining over the following years and the amount carried forward will attract an interest rate of 10.75 per cent.
Premium would be rescheduled in cases where developers were unable to service their debt, operating expenditure and the payment of premium. Premium is the amount developers have to pay NHAI for a build-operate-transfer project, on the assumption that the returns would be quite high. The amount is decided at the time of bidding on the basis of projected future traffic flow.
The term for payment of the premium is usually 20-25 years and the amount payable by developers range from Rs 3 crore to Rs 680 crore a year, which goes up every year by five per cent, according to the existing norms. Various companies owe NHAI premium worth Rs 151,000 crore, spread over the next 20-25 years across projects.
During 2010-2012, developers had bid aggressively when the government awarded a record 147 road projects worth Rs 1.47 lakh crore. At the time, India’s economic growth was much higher but it slowed subsequently and even the input and inflationary costs have gone up since.
Currently, road projects worth Rs 83,000 crore are pending completion. Since 2009, the government has recorded the completion of only three projects, adding only 315 km to the existing highway network.
ROAD AHEAD
- The deferment would be available from 2014-15 till 2026-27
- NHAI had received 15 applications for rescheduling of premium
- 5 projects were not taken up by the board as these do not qualify for the scheme
- There are 39 projects eligible for the relaxation under the rescheduling policy
